Home / Opinion / Online-views /  Budget in the right direction on employment

An effective policy for job creation is more about creating the conditions for spontaneous combustion rather than starting a fire. Many came together for China to move 500 million (people) off farms but three key elements were urbanization, infrastructure and education. Despite the initial disappointment with this budget, I believe that it made important progress on improving India’s habitat for job creation by focusing on infrastructure, urbanization, entrepreneurship and education.

The perpetual political dream of taking jobs to people rather than people to jobs needs massive urbanization and infrastructure. India only has 50 cities with more than a million people versus China’s 400. The focus on smart cities, SEZs (special economic zones), industrial corridors, creating new industry clusters (textiles, biotech and tourism), and low-cost housing for youth is complemented by moves in areas such as rural Internet connectivity, roads, water, ports, highways and warehousing capacity. The focus on entrepreneurship was clear in GST (goods and services tax), electronic interface for government, easing norms for foreign direct investment, tweaking MNREGS for productivity, extending 24x7 customs clearances, streamlining tax administration, small banks and the 10,000 crore fund for start-up companies.

Education saw some interesting moves as well; fixing the lousy apprentices Act, 100 crore to convert employment exchanges into career centres, and the convergence among various skills schemes into a National Multi-Skill mission are welcome. The allocation to school assessments and teacher training signals an important shift from yesterday’s war of enrolment to tomorrow’s war of learning outcomes.

The plan to set up new IITs and IIMs was already known and should be welcomed but the money allocation is probably inadequate if they are to make the investments that will let them catch up with the older ones. The new medical colleges are interesting but hopefully only a preview of massive reforms to medical education regulation. The omission of any moves on higher education deregulation was probably intentional but it would have been wise for the finance minister to signal that this government does not confuse university buildings with building universities. The 100 crore allocation to virtual classrooms was an important signalling of the acceptance of online education which will end the apartheid by which Massive Open Online Courses from overseas can register students in India but Indian universities cannot operate beyond state borders. An obvious omission was labour law reform but a budget is hardly the right forum for an issue that should increasingly be pushed down to state chief ministers. The most important labour reform that is fully with the central government is fixing India’s benefits regime, which confiscates 49% of the salary of low-wage employees for poor value-for-money schemes such as the Provident Fund, ESI (Employees’ State Insurance), etc.

Unfortunately, this government endorsed the financially unsustainable move by UPA (United Progressive Alliance) to raise the pension paid by EPFO (Employees Provident Fund Organisation). This benefit regime has been responsible for 100% of net job creation happening informally over the last two decades and can only be fixed by the introduction of competition. Of course, the budget could have benefited from a better speechwriter. But if you look beyond style to substance, you will find interesting seeds for the rest of the government to water.

The author is chairman, Teamlease Services Pvt. Ltd.

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